What are your hidden opportunity costs

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Q1. The current bank interest rate is 5 percent. You borrow $10,000 from the bank as well as invest $20,000 of your own money in a new business for a year. Detail the obvious costs and the implicit costs (hidden opportunity costs) for both amounts of money you are investing.

Q2. If your business earns accounting profits of $50,000 and economic profits of $20,000, what are your hidden opportunity costs?

Q3. You earn a good salary, but you hate your boss. You develop a plan to start your own business that projects economic profits of $5,000 at the end of the first year. But just as you are about to go ahead with your new business, you are offered a job for $15,000 more than you were earning before. How does that change your projected economic profits? Would it change your decision to start your new business? Why or why not?

Reference no: EM131673198

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